On Monday, Elon Musk reached an agreement to buy Twitter Inc in a multi-billion-dollar cash deal. Musk reportedly met with Twitter’s board of directors over the weekend to discuss his $43 billion (£33.6 billion) buy-out offer. The deal will be handing ownership of the social media network to the world’s richest person.
Musk’s strategy targeting Twitter has progressed at a dizzying pace. Musk, the CEO of electric carmaker Tesla, became the largest stakeholder on Twitter with a 9.2 percent interest in the company at the beginning of April. He was then invited to join Twitter’s board of directors, but declined, before making a surprise bid for the firm on April 14, claiming that he wanted to “unlock” the social media platform’s “amazing potential.”
Musk hasn’t exactly wooed Twitter’s board; instead, this has been a brazen bid from a brazen businessman – no negotiating, no compromising. Because this is a private sale of a private company rather than a merger of two giants, there are unlikely to be many regulatory hurdles, reports BBC.
Trading in Twitter’s stock has been paused amid speculations that the company could reach an agreement with Elon Musk on an acquisition as early as Monday. His approach had been previously turned down by Twitter. Its management had declared a so-called “poison pill” approach to stave off a potential hostile takeover after the Tesla CEO initially made his bid, making it difficult for him to increase his stake.
Funding the buyout
Musk revealed in a Securities and Exchange Commission (SEC) filing that he has obtained $46.5 billion in promises to help finance the possible deal. Wall Street Banking Giant Morgan Stanley, Senior Funding, and other entities provided around $25.5 billion in debt financing. He also stated that he has invested $21 billion in equity funding.
In the same document, Musk stated that he was considering a tender offer to buy Twitter shares directly from shareholders. Twitter will become a privately held firm after the acquisition is completed.
The transaction, which was unanimously approved by the Twitter Board of Directors, is scheduled to close in 2022, subject to stockholder approval, regulatory clearances, and other standard closing conditions.
Twitter investors will get $54.20 in cash for each share of Twitter common stock they possess when the proposed deal closes, according to the terms of the agreement. The purchase price is a 38 percent premium to Twitter’s closing stock price on April 1, 2022, the final trading day before Elon Musk revealed his roughly 9% ownership in the company.
With this deal, Twitter’s financial advisors are Goldman Sachs & Co. LLC, J.P. Morgan, and Allen & Co., while legal counsel is Wilson Sonsini Goodrich & Rosati, Professional Corporation and Simpson Thacher & Bartlett LLP. Musk’s primary financial advisor is Morgan Stanley. Financial advisors BofA Securities and Barclays are also involved. Legal counsel is provided by Skadden, Arps, Slate, Meagher & Flom LLP.
Ramping up the Free Speech
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” he said in a statement. He wants Twitter’s algorithm for selecting tweets to be made public, and he opposes giving advertisers too much control on the platform.
For years, Musk has portrayed himself as a supporter of the First Amendment and free expression. But there are several reports that indicate he endeavored to exert control over what journalists, bloggers, analysts, and other researchers say about his companies, their products, and himself on numerous occasions.
Musk’s decision follows the path of other billionaires who have purchased control of prominent media platforms, such as Jeff Bezos’ purchase of the Washington Post in 2013. Musk, on the other hand, can now secure his capacity to use Twitter to promote his companies, investments, and himself by dominating the entire social network and not just his 83 million followers.
The billionaire has a flair for being provocative and doing what he pleases, not really caring about the outlook. The acquisition of Twitter has taken the internet by storm, with users unclear of what it means for them. Even now, there are too many questions left unanswered.
What level of control will Musk have over Twitter? What will Musk’s Twitter resemble? Is Trump coming back (despite his denials)? What will become of the workforce?
Even Twitter’s CEO didn’t have answers to these questions. In a company-wide townhall, he deferred most of these questions, saying these were questions to be asked to Musk.
